Teva Provides Mixed 2022 Guidance; Uncertainty Surrounding Opioid Litigation Remains

Teva's 2022 at first glance appears to be more of the same, with flat to declining revenue and adjusted EPS weighing on a company that has struggled to offset declining sales of its largest drug (Copaxone) and has gradually lost market share in U.S. generic prescription drugs due to fewer product launches, constrained by its high debt load and litigation risk. As such we retain our extreme uncertainty rating and no-moat rating. On a positive note, however, we were pleasantly surprised with the company's margin improvement during the quarter, largely due to cost containment measures (reduction in manufacturing and office facilities), and the company was able to successfully refinance its looming 2023 maturities, reducing its liquidity risk. Primarily as a result of these improved margins, and adjustments to our forecast for the company's branded portfolio, we are raising our fair value estimate to $11 per share from $9.